Change in refund due to entering W2 for Medicare income that is non taxable for my disabled child

Hello,

I am entering my 2024 tax information into your system.

We live in California.

I have a W-2 for non-taxable income, specifically Box 12A with code II for Medicaid income. The employer listed is my minor child, who is also the recipient of the services for which we receive this income. As a result, we are not subject to Social Security and Medicare taxes, and this income is excluded from our gross income as well.

However, when I enter this W-2, my expected refund decreases by about $3,000.

Could you please help me understand why this non-taxable income is affecting my refund?

Thank you for your assistance.

1636

Expert Alumni

Apr 2, 2025 2:14:27 PM

Review your entries for the W-2. The box should be checked that your W-2 is a Nontaxable Medicaid Waiver Payment.

Follow the steps below to review your W-2 for Medicaid Waver Payment:

Follow the steps below to enter your W-2

Open TurboTax
Select Federal Taxes
Select Wages & Income
Select Work on W-2
Enter your W-2, at the Let's check for uncommon situations; check the box next to Nontaxable Medicaid waiver payments
Continue following the prompts.

Review the TurboTax Help article How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax? for navigation instructions.

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Change in refund due to entering W2 for Medicare income that is non taxable for my disabled child